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WSJ: Soros Makes Big 'Bearish' Trades on Fears of China, EU Collapse

WSJ: Soros Makes Big 'Bearish' Trades on Fears of China, EU Collapse

By    |   Thursday, 09 June 2016 10:49 AM

Billionaire investor George Soros has launched a series of "big, bearish investments" after a long break from trading, the Wall Street Journal reported, citing people close to the matter.

Soros has been warning of “intractable” political and economic problems in China, Europe and other areas that he thinks will soon negatively affect U.S. and Western stock markets.

Soros Fund Management, which manages around $30 billion for the Soros family, sold stocks and bought gold and shares in gold miners, amid a "gloomier" view of the global economic outlook and the potential for large market moves, the WSJ reported.

Soros has become more involved in trading at his family office, concerned about the outlook for the global economy and the risk that large market shifts may be at hand, a person familiar with the matter told Bloomberg News.

Soros, 85, has been spending more time in the office directing trades and recently oversaw a series of big, bearish investments, said the person, who asked Bloomberg News not to be identified discussing private information.

Soros Fund Management LLC sold stocks and bought gold and shares of gold miners last quarter, anticipating weakness in various markets, according to a government filing.

Soros' firm bought over 19 million shares of Barrick Gold Corp. in the first quarter, according to securities filings, making it the firm’s largest stockholding at the end of the quarter. That position has gained more than $90 million since the end of the first quarter, WSJ.com reported.

Soros Fund Management also bought a million shares of miner Silver Wheaton Corp. in the first quarter, a position that has increased 28% so far in the second quarter. Investors often view gold as a haven during times of turmoil, the WSJ explained.

Meanwhile, gold has climbed 19% this year, the Journal noted.

The octogenarian and philanthropist, who built a $24 billion fortune through savvy wagers on markets, has taken a dim view of the world economy and particularly of China.

In April, Soros said China’s debt-fueled economy resembles the U.S. in 2007-08, before credit markets seized up and spurred a global recession. Most of the money that banks in China are supplying is needed to keep bad debts and loss-making enterprises alive, Soros said at the time.

In January, the former hedge-fund manager said a hard landing in the Asian nation was “practically unavoidable,” adding that such a slump would worsen global deflationary pressures, drag down stocks and boost U.S. government bonds.

“China continues to suffer from capital flight and has been depleting its foreign currency reserves while other Asian countries have been accumulating foreign currency,” Soros said in an email to the Journal. “China is facing internal conflict within its political leadership, and over the coming year this will complicate its ability to deal with financial issues.”

Soros also argues that there remains a good chance the European Union will collapse under the weight of the migration crisis, continuing challenges in Greece and a potential exit by the United Kingdom from the EU.

“If Britain leaves, it could unleash a general exodus, and the disintegration of the European Union will become practically unavoidable,” he said. “I’m confident that as we get closer to the Brexit vote, the ‘remain’ camp is getting stronger,” Soros said. “Markets are not always right, but in this case I agree with them.”

His bearish view prompted him to pare back his U.S. stock investments by more than a third last quarter, betting against the equities while banking on gold. The value of Soros Fund Management’s publicly disclosed holdings dropped by 37 percent to $3.5 billion at the end of March, according to a government filing in May.

Soros’ former chief strategist, billionaire investor Stan Druckenmiller, echoed Soros’ view on gold, saying last month that the yellow metal is his largest currency allocation as central bankers experiment with the “absurd notion of negative interest rates.”

The last time Soros became closely involved in his firm’s trading: 2007, when he became worried about housing and placed bearish wagers over two years that netted more than $1 billion of gains, WSJ.com reported.

(Newsmax wire services contributed to this report).

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Billionaire investor George Soros has launched a series of big, bearish investments after a long break from trading, the Wall Street Journal reported, citing people close to the matter.
soros, trading, market, shifts
Thursday, 09 June 2016 10:49 AM
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